376. Can I call the Committee to order and welcome our witnesses today, Lord Macdonald of Tradeston, the Minister for the Cabinet Office, and Douglas Alexander, who is the Minister of State in the Cabinet Office. We are very pleased that you were able to come along. The broad heading of our session is The New Centre. We are looking at the different ways in which the centre is being organised and you are the last instalment of this inquiry. It means that we can ask you anything we like about anything really, and also it is the end of term so you can just relax. I wonder if you would like to say anything to us before we start?

(Lord Macdonald of Tradeston) No, Chairman. We are happy to cut to the chase.

377. Could I ask you this then? We have now had a second reorganisation of the centre in the space of a year. I suppose what I want to know is what was unsatisfactory about the first reorganisation, why did that not put the centre into a form that could do the business, and why do we think now that we have got a centre that can do the business, or do we think that, or do we think, as Richard Wilson told us last weekor somebody else; I cannot rememberthat this was like Microsoft and Windows and that you could have a different version each year? Are we now in a settled state or is there more to come?
(Lord Macdonald of Tradeston) The first year, Chairman, was one of evolution. You must recall that of course, following the election, we had set up a number of central units. During the past year we have seen the development of those units in a way which has generally been judged, certainly from our perspective, to be satisfactory. At the same time there were other developments in the areas where the Deputy Prime Minister was active, and again there were many positive developments there, for instance in areas like regional government. So by the end of that relatively successful year we felt that we were in a position where the central units had proved their potential worth and therefore we should give them more clarity and focus inside the new structure, of course, which was enabled by the appointment of Sir Andrew Turnbull.

378. I think it would be useful if you could take us through essentially how this works. As I understand it, we now have the Cabinet Office as essentially the progress chasers for the delivery programme and the units being very different bits of this enterprise, and you as the Minister overseeing this and reporting to the Prime Minister. Could you tell us in practice how the chasing of delivery works inside Government?
(Lord Macdonald of Tradeston) In practice, of course, the Cabinet Office has four areas of responsibility, one of which is to support the Prime Minister, another of which is to give leadership in the quest for better delivery and reform of the public sector, and of course we must continue to support the rest of Government as well as being active in areas of intelligence and security. What we have been particularly concentrating on has been the agenda for reform and delivery. As I said earlier, we believe that the experience of this past year has shown that the Delivery Unit is able to work well with individual departments and indeed with the Treasury and is beginning to produce positive results and that the OPSR, the Office of Public Services Reform, too has clearly established its value. We believe that in our role as Ministers we can work very easily with this new simplified structure under the control of Sir Andrew Turnbull and working closely to David Omand. It is not a difficult structure. Douglas and I are able to work as two Ministers in place of the four that historically have been in place there, probably with a bit more expedition. We have got less to do by way of other distractions, and I recall Michael Heseltine's definition of the Cabinet Office as a `bran tub'. I think that is no longer the case. It is much more clearly focused now so Douglas and I are able to work with the units and with the Cabinet Secretary and the Permanent Secretary and indeed with other departments and with Downing Street.
(Mr Alexander) I think that is a very fair characterisation of where we are. I am in a slightly different position from Gus, having just arrived in the Cabinet Office. I certainly have found that degree of clarity that Gus suggests with both Ministers reporting directly to the Prime Minister and having ministerial oversight over parts of the operation as it is taken forward, but also the clarity, frankly, owing to the fact that I answer to the Cabinet Office on the floor in Westminster in the Commons and Gus answers in the Lords. It means by definition that you have to work closely together and in that sense I am very optimistic, five or six weeks into the job, in terms of the ability to make sure there is that clarity of purpose in the job.

379. Just in terms of how this works in practice as opposed to what it is like conceptually, could you argue that now we have all departments locked into public service agreements; we have now got a new system of regular reporting of performance against targets that the Treasury is going to do through its web site and so on? Why cannot that system just be allowed to get on with it? Why cannot departments just do that? What extra are you people adding to it?
(Lord Macdonald of Tradeston) I believe if you take the Delivery Unit, a small unit in relative terms with around 20 people in it covering four key departments, what we are able to bring there is a constant focus on what the priorities for the departments have got to be from the centre, from the Cabinet Office and from the Prime Minister. Also the ability, where departments are preoccupied, to offer them some help in defining what the problems are and where they might be able to get assistance either from other parts of the Government, perhaps from the Delivery Unit itself. Introducing them perhaps to techniques that are available from the Office of Government Commerce (OGC) or from the OPSR in ways that they can apply in health and education and in the Home Office. The experience of the past year, after the warnings that we have had about the potential defensiveness of departments, has been a very positive one. People have been receptive to what we have to offer.
(Mr Alexander) I do not see that there is any contradiction between having an effective centre and in helping departments in exactly the way you describe to take forward the delivery of the reform agenda. If I reflect on the words of the Prime Minister at the Liaison Committee, he was very clear in terms of saying he wanted to be able to have a degree of capacity at the centre but I think that was probably articulated just as clearly by Sir Andrew Turnbull when he gave evidence to this Committee when he talked about some of the central functions of Government by definition as a complex and large organisation, and frankly many other equivalent large organisations would as a matter of course retain at the centre a capacity for the kind of monitoring and support work that Gus has been leading in terms of the Delivery Units, the capacity, for example, to ensure that the centre stands ready to support and assist departments in the huge endeavour towards e-transforming their practices. I think there are a number of natural functions which can be retained at the centre at exactly the same time as building capacity within departments to take forward that agenda.